Collection
Averages and Outliers

If the shortest line between two points is a straight line, then strategy should be a simple matter of finding the straightest path to the goal and charging ahead. But how do we find that path and how do we know what the goal is?

In many businesses, strategy is synonymous with "planning". The object is to identify a clear goal and then to design an efficient set of actions to achieve it. In this framework, volatility and uncertainty are things to be avoided since they complicate forecasting and increase risk. These systems strive for standardization toward a consistent mean. However, some writers have suggested a very different approach (see When Choosing R&D Projects, Go With Long Shots )

In general, we have a poor understanding of the nature of "risk" and "probability." (see The Streak of Streaks and Losing the Edge ) The materials presented here explore this concept and how it can be turned to advantage. An understanding of risk can suggest very different strategic models. For example, we can observe many instances in biology of brilliantly adaptive strategic "solutions" among organisms that have evolved through a non-targeted, inefficient process of mutation and selection, as described in Darwin's work on Natural Selection . In such models it is the outliers, the individuals that deviate from the foreseen course, that are the catalysts of strategic breakthroughs.